Tankless Water Heater Guide: Installation Costs, Sizing, Pros & Cons

Average Costs For:
Most Homeowners Spent Between: Most People Spent: $1370 - $2,410
Low End
$1,140
Average
$1,890
High End
$3,390

See costs in your area Start Here - Enter Your Zip Code


The average cost to install a tankless water heater is $1,200 – 2,500. However a tankless unit can cost up to $4,000 depending on the heater type, fuel source, brand, and the complexity of labor involved.

Our calculator lets you get an instant price estimate for a tankless hot water heater (gas or electric) based on your specifications.

Depending on the type of water heater you want, the estimator will either add a power venting module (for gas), or include an electrical panel upgrade to 200 Amps (for electric).

Estimate Tankless Water Heater Costs Now!

Fuel Type
Vent Type
Quality
Job Type
US Region

Low End
$0
Mid Range
Estimated Price: $0
High End
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How to calculate your water heater cost

Our projected prices for installing a tankless water heater are based on data from 100s of HVAC and plumbing contractors in US. The formula takes into account any extra labor charges that may be added when switching from a storage to a tankless hot water heater

  • 1) Select your fuel source (Gas or Electric). This will have a major impact on how much you will end up spending. A tankless gas water heater is more expensive.
  • 2a) If electric: Select your current electric panel (AMPs) and how many people live in the house.
  • 2b) If natural gas: Select if your gas hot water heater can be directly vented into the chimney OR it needs a power vent. In most cases, you will need the power venting option. We recommend you price it both ways. The difference is about $470 extra, for power venting.
  • 3) Choose the “quality” of your hot water heater: They can be cheap or expensive, depending on the brand, features, and other factors. Many gas tankless water heaters can cost from $600 to over $2000. I do think a “premium” option is excessive and unnecessary, but would recommend staying away from many low-end brands, due to reliability concerns.
  • 4) Select if this is a new install OR retrofit (replacing an old leaking tank) job: It is much easier to install a water heater in a new home – you don’t have to worry about clutter, moving pipes/electric cables, etc. Everything is pre-planned, or can be easily adjusted.

    However, if it is a new construction home, you will need to do a “Power Vent” 99% of the time, as new homes don’t have masonry chimneys.
  • 5) Enter your region: Keep in mind that local installation prices vary as much as 30%. Pacific region (WA, OR, CA) is the most costly, while West South Central (TX, AR, LA, OK) is the least expensive.
  • 6) Get your estimate: You will get 3 price ranges – Low, Mid and High. This reflects different quotes that you may get from Plumbing / HVAC contractors, depending on how competitive / busy they are, overheads, and profit margins.


How much does a water heater cost?
Water Heater Repair
$250 - $350
40 Ga. Water Heater
$850 - $1100
Tankless Water Heater
$1200 - $3500

See costs in your area Start Here - Enter Your Zip Code



Pro Tip: You may want to think twice about hiring a contractor who gives you a very low price. Often, this means that he is not insured and may even be unlicensed, which is very critical when working with plumbing, gas or electricity.

Moreover, these “cheap” contractors will most likely not have a master gas piper or master electrician, may not pull job permits, and will try to do things they are not licensed for. So keep this in mind and verify licenses and insurance certificates, when getting quotes.

How much is a tankless water heater?

For many homeowners water heater cost is one of the primary factors that impact the decision about which water heater type to install.

Compared to the cost of a traditional water heater tank, a tankless water heater costs 2-3 times as much.



Typically a gas powered tankless water heater costs $600-900. Some gas units cost as little as $450-550. Higher end gas tankless heaters cost $1,200 – 2,800. Popular gas tankless water heater brands are: Rheem, Tagaki, Bosch, Noritz, Rinnai and A.O.Smith (most expensive).

The average cost to install a gas tankless water heater is $1,000-1,500 depending on local labor rates and complexity of the work involved. Plumbers charge $75-150 per hour for their labor. If you will need to add a gas line expect to spend another $500-600.

By contrast an electric tankless water heater costs less than a gas unit. Point of use electric tankless water heaters cost as little as $100-250. On average, an electric tankless heater runs about $350-600. High end electric models cost $800-1,900. Popular electric tankless water heater manufacturers are: EcoSmart, Rheem, Steibel Eltron, Eemax, Bosch, iHeat.

Its much faster and easier to install an electric tankless water heater compared to a gas one. Consequently the cost of installation is also cheaper. The install takes 2-3 hours and costs $160-450 depending on local labor charges.

Solar tankless water heater prices

Homeowners that are looking for the most earth-friendly heating system paired with the greatest energy savings go for solar heating. A solar tankless water heater is on the higher end of the price spectrum. Average prices for the unit and installation are between $3,000-6,000. However, some solar tankless heaters can cost as much as $10,000-12,000.

While the initial price tag for a solar heater is very high, there are some major benefits to consider:

– Solar hot water heaters qualify for a 30% tax credit with cap from the government. So if your solar heater costs $5,500 you will get $1,650 of investment back right away.

– A solar unit can lower your water heater expenses by 60-80%

– Solar is a truly green and safe water heater option. There are no gas leaks, poisonous carbon monoxide fumes to worry about and you are using the cleanest energy source to operate the unit.

Single point vs whole house

Essentially, there are two types of tankless water heaters: whole house and single point models.

A “point of use” or single point tankless water heater is installed right near an individual appliance or faucet that will use its water. For example if can be installed in bathroom, or in a laundry room, or near a dishwasher. The advantage is that its cheap to install and you can have a few different units throughout the house that operate independently of each other. A single point tankless system can heat up 0.5 – 2 gallons of water per minute.

A whole house tankless water heater essentially services the needs of multiple water use points simultaneously. Depending on their capacity, a whole house tankless unit can heat up 5-10 gallons per minute. This means you can have the washer running and a person taking a shower at the same time without running out of hot water.

If you have a very large household that uses a lot of water for various tasks at the same time, you may want to consider installing a whole house tankless water heater and one-two other single point unit.

Gas vs electric

It turns out that there are many pros and cons that both on demand gas and electric water heaters have. It all really depends on your household needs, usage preferences and budget.

In most cases, it is smart to go with a gas model, if your house is already outfitted with this power source. Doing a retrofit power source switch can be very expensive, and you need to carefully consider whether long-term benefits and savings will offset the initial high cost.

When you research different options, you will discover that a tankless gas heater is significantly more expensive than an electric one. Budget gas models cost $700 and go up to $1,600.. On the other hand a tankless electric water heater starts at around $200-250 . Expensive electric tankless units are $700-800. This is the equivalent of the cheapest gas tankless heater.

Moreover, a gas water heater is a lot more powerful than an electric one. This makes it a better fit for a large household that uses a lot of water on demand.

Usually, due to lower gas than electricity costs around US, you can save at least 10% on the operating costs of a gas device compared to an electric one.

Another perk of a gas tankless water heater is that most models qualify for a $300 federal tax rebate. Some states offer additional rebates. Electric tankless models don’t get any rebates.


How to select the right size tankless water heater

When you install a whole-house tankless hot water heater, its very important to get a unit that will heat up enough water to meet your household needs. It would be very unpleasant to run out of hot water in the middle of a shower:(:(:(

Here is how pick the correct heater size for your home:

1. Figure out the maximum number of devices you need to run at the same time. Ex: 1 shower, kitchen faucet and a dishwasher.

2. Estimate the water flow rate (gallons per minute) of each device and add them all up.

Washing machine (high efficiency): 1 gpm
Washing machine (low efficiency) 1.5 to 2.5 gpm
Standard shower head: 2.0 gpm
Older rain shower head: up to 5 gpm
Bathroom faucet: 0.5 to 1.5 gpm
Dishwasher (high efficiency): 05 – 1.5 gpm
Dishwasher (low efficiency): 2 to 2.5 gpm
Kitchen faucet: 1.5 – 3 gpm

(For your calculations its best to take the average or the maximum rate, if you are not sure of the exact gpm)

So in the example above, adding everything together gives a total flow rate of about 6 gpm. This means your tankless water heater should have the flow rate of 6 GPM.

3. Now you need to determine the temperature rise. This is the difference between cold water temperature that comes in and the ideal desired temperature. The average desired water temperature is 110-120 F. The average ground water temperature is about 57 F. However, this can change depending on where you live. In the Northern states the ground water temperature can get as low as 35 F and in Southern states it can be as high as 77 F.

The bigger the difference between ground water temperature and the desired temperature, the less fixtures the tankless water heater will be able to service at the same time.

For example, we will take 120F – 57F = 63F

To determine the temperature of the ground water in your location, refer to the map below:

tankless water heater size map

4. You need a tankless water heater that produces a flow rate of 6 gpm at 63F temperature rise.

Pros and cons of tankless vs storage hot water heater

Lets take a look at all the pros that you get by installing a tankless hot water heater instead of a water tank:

– Much longer service life. A typical tankless water heater lasts at least 20 years, while a storage tank lasts 10-12 years before requiring replacement.

– Better and longer warranties. Most tankless units come with a 15 year warranty, while most storage tanks have only a 6 year warranty.

– No risk of water leaks, floor damage, oil spills into the ground (oil-fired hot water tank)

– Much greener for the earth – the tank will not end up in the landfills, no ground contamination from oil.

– A tankless heater is compact and saves much needed storage space.

– Tankless water heaters provide unlimited hot water on demand as long as its operating within its capacity. With a storage tank, you may run out of hot water and will need to wait until its reheated again.

– A storage tank wastes energy by reheating water several times a day, when its not being used. A tankless heater saved energy and heating costs by supplying hot water only when its needed.

If you are considering installing a tankless water heater, get no-abligation free quotes from local plumbers.



How much does a water heater cost?
Water Heater Repair
$250 - $350
40 Ga. Water Heater
$850 - $1100
Tankless Water Heater
$1200 - $3500

See costs in your area Start Here - Enter Your Zip Code



Cons

Of course, tankless water heaters are not without their disadvantages. Here are the main ones to keep in mind:

– Initial cost is 2-3 times higher than for a hot water storage tank

– Electric tankless water heaters require a relatively high power draw, which can increase your electric bill. They may also require you to upgrade your electric panel to at least 220 amp.

– If the tankless water heater is too small, it will not be able to accommodate simultaneous water usage tasks, such as taking a shower and doing laundry.

– A tankless gas water heater needs to be vented to the outdoors, so you may need to spend extra money to install a proper venting system.

– If you live in an area where there is hard water, you will also need to install a water softener system. Without it you will quickly ruin your tankless water heater.

– Installing a tankless hot water heater is a lot more complex and involved than a storage tank one. This drives up the cost of installation. If you try to save on the cost of the install and hire a sub-par quality plumber, or worse yet an unlicensed handy man, you can run into a a lot of trouble with the operation of the heater.

Is a tankless water heater a good investment?

If you are thinking purely from the financial investment perspective without taking into consideration any of the other benefits, a tankless water heater is actually NOT worth the money.

Here is why:

Its estimated that based on current energy savings of tankless vs storage tank water heater, it will take you about 15-20 years to recoup the difference in the initial device and installation cost.

According to the US department of energy a gas tankless water heater saves up to $108 per year, compared to a gas hot water tank. An electric tankless water heater saves about $45 per year, compared to an electric hot water tank.

Since the cost difference between the two types of heater can easy end up being $1,500-2,000, it simply takes too long for your wallet to feel any benefit.

Ultimately, cost savings is not a good enough reason alone to switch from a storage tank style water heater to a tankless model.

Average Costs For:
Most Homeowners Spent Between: Most People Spent: $1370 - $2,410
Low End
$1,140
Average
$1,890
High End
$3,390

See costs in your area Start Here - Enter Your Zip Code


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